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First Solvency II compliant catastrophe bond SPRV established in Ireland


The completion of French reinsurer SCOR’s latest catastrophe bond deal, Atlas Reinsurance VII Limited, last week was it turns out a first for the market, according to financial law firm Walkers Ireland. Walkers Ireland acted as Irish legal and tax counsel, as well as listing agent for the transaction and it was the first cat bond deal to be approved by the Central Bank of Ireland since 2008 as well as the first cat bond with a Solvency II compliant Special Purpose Reinsurance Vehicle (SPRV).

The cat bond saw SCOR transfer certain U.S. hurricane, U.S. earthquake and European windstorm risks to capital market investors on both aggregate and per-occurrence basis’ using industry loss index triggers, using an Irish domiciled SPRV Atlas Reinsurance VII Limited.

According to Walkers, in order to receive approval from the Central Bank of Ireland the Atlas Re VII SPRV was subject to a detailed application process and had to demonstrate compliance with the European Communities (Reinsurance) Regulations 2006 in addition to the CEIOPS (now known as EIOPA) Advice for Level 2 Implementing Measures on Solvency II: Special Purpose Vehicles.

“The approval process with the Central Bank of Ireland was run in an efficient manner in line with the ambitious timing expectations of the market,” said Garry Ferguson, partner with Walkers and Head of the Structured Products and Capital Markets Group in Ireland. “This transaction demonstrates that Ireland continues to be a leading centre of excellence for capital markets, ILS and securities listing transactions,” Mr. Ferguson added.

This is interesting and we would imagine could lead some other European catastrophe bond sponsors to look at Dublin as a potential future home for their issuing entities. Being able to comply with Solvency II rules could become important for qualifying cat bond risk transfer under Solvency II capital adequacy rules in the future and this could help Ireland to increase its share of the cat bond domicile market.

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